With a few exceptions such as child support, taxes, and federal student loans, a creditor must first sue you and win a judgment. It then asks the court for a garnishment order and serves it on your employer, who is required to withhold from each check and send the money to the court. Many people learn about the judgment only when the first short paycheck arrives, because the collection suit was served at an old address or ignored.
Indiana follows the federal Consumer Credit Protection Act limits: a creditor can take the lesser of one quarter of your disposable earnings or the amount by which your weekly disposable earnings exceed thirty times the federal minimum wage. Child support orders can take more. For a family already living paycheck to paycheck, a quarter of take-home pay is the difference between making rent and not.
Federal law prohibits an employer from firing you because of a garnishment for a single debt. It does not protect you if garnishments pile up for more than one debt, and the embarrassment of the payroll department knowing is real. Stopping the garnishment early protects both the paycheck and the job.
Filing a Chapter 7 or Chapter 13 invokes the automatic stay, which stops the garnishment immediately; we notify your employer’s payroll department the same day. In a Chapter 7 the underlying judgment is usually discharged, so the garnishment never resumes. In a Chapter 13 the debt is handled through the plan. If a significant amount was garnished in the three months before filing, the trustee may be able to recover it from the creditor, and in some cases that money comes back to you.
Child support and alimony withholding continue through a bankruptcy and are not discharged. Most student loans and recent taxes are also not discharged in a Chapter 7, although a Chapter 13 can stop the collection and pay them through the plan on better terms. We will tell you which category your garnishment falls into before you file.
The first meeting is free, in person at either office or by phone or video. Bring whatever you have: bills, collection letters, pay stubs, a tax return if it is handy. We go through the whole picture, tell you whether bankruptcy is the right tool and which chapter, and quote a flat fee with a payment plan. Nothing is filed until you are comfortable with the plan. More about how we handle bankruptcy cases.
Admitted to the Indiana bar at 24, the youngest licensed attorney in the state at the time, Miguel pairs that early start with more than fifteen years helping Northwest Indiana families through injury claims and bankruptcy.
The stay is effective on filing. Depending on where your employer is in the pay cycle, the next check or the one after it is garnishment-free.
Sometimes. Amounts garnished in the ninety days before filing above a statutory minimum can be recovered as a preference, and depending on the exemptions some of it may be returned to you. We review the garnishment history before filing.
Yes, a judgment creditor can freeze and take funds from a bank account. The automatic stay stops that as well.
Call either office or send a message. We will tell you plainly whether bankruptcy is the right tool, and which one.